DowDuPont Inc. (NYSE:DWDP) Q2 2018 Earnings Conference Call - Final Transcript
Aug 02, 2018 • 08:00 am ET
(Operator Instructions) David Begleiter, Deutsche Bank.
Ed, you increased 2018 cost savings by a little bit. Why did you increase the full $3.3 billion of cost savings target?
David, we're still working on that and we have not given up on, looking at potential increase there. One of the areas we're going back on is the procurement area, which you know is a big chunk of where we got savings, two-thirds of our projected savings on the 3.3 is coming from kind of the COGS area and so we're taking another run through that and I would hope we have some opportunity there. So we'll address that the next time we speak publicly, but what we have been able to do, as we mentioned in our comments is we have almost 900 projects, almost all -- last quarter, by the way, we had about 75% of them being worked on. Now, we're literally about 95% of them are already either initiated or finished or well on their way. So, we've just been able to really expedite and kind of move the timeline up on it. So, it was really a move up of some of the 3.3% to get that extra 200 million in here, but again, we have -- we're not giving up that we could maybe get that number higher and we're working real hard on it.
P. J. Juvekar, Citi.
P. J. Juvekar
So in specialty plastics, your price was up only 1%, despite strong polyethylene prices in the US since last year and because of the hurricanes and all that. So, is it polyethylene price outside the US that is impacting that or something else? And then Jim, as this cracker start up in the US, including your Texas line, how do you see the shape of the cycle in second half and then going into 2019?
This is Jim. So on plastics, well, we did see good volume and good price in North America. We also saw some softening in Europe so chain margins were down a bit in Europe and I think with the third of our business based over there, that pulled things down a little bit and I would say Asia Pacific held up, I would say, kind of flattish for the quarter, so it's mostly volume growth that you see coming through there. We had $400 million of higher raw material costs, so you've got some margin compression push on the raw materials side, but I'm not worried about volume growth. In plastics, volume growth is very robust and it's across the board, all the segments are growing strong. As the ethylene cycle goes, ethylene is a little bit disconnected right now, just in the United States, Gulf Coast, because there's not enough derivative demand or supply there to convert it. And so, I think as the year progresses, you're going to see some of that balance out in the short term. You've seen some people turn down higher cost ethylene derivatives, because there's really